The Mobius car company has gone into liquidation, after burning through $56 million from five rounds of finance.
Mobius wanted to manufacture rugged but basic vehicles that could comfortably manage African roads. The first model sold for Sh1.3 million new but later fancier models sold for Sh1.3 million and Sh3.15 million.
The Mobius cars were good value, especially when you consider that a used Probox, its main competitor, from Japan with over 100,000 km on the clock can easily cost Sh1 million.
What lessons can we draw from this? Firstly, running a start-up is not easy. Most new businesses go bust. Founders have sleepless nights. Don't fall into the trap of 'following your dream'. If you do start your own business, prepare to sweat blood.
Secondly, should government have done more to support Mobius? Kenya's many Export Processing Zones give tax breaks to their tenants. Yet a contributing factor to the collapse of Mobius, which was not in an EPZ, was a huge tax demand on its foreign funding. With a favourable tax regime, Mobius might still be in business.
So let government determine which investments are genuinely in the national interest before awarding any tax breaks.
Quote of the day: "It is better to die on your feet than to live a lifetime on your knees."
Emiliano Zapata
The Mexican revolutionary was born on August 8, 1879
